Depending on who you listen to, you may be under the impression that the city is managing its finances well because we are staying within our budget, revenue sources are at or exceeding budget expectations, and we have a plan in place to eliminate the budget “gap” within the next couple of years.

But it’s not quite that easy, and the path we’re currently on will cost you money and decrease services.

There are basically two areas of the city’s 2012 budget that have deficit spending: the general fund and the REET1 (Real Estate Excise Tax) fund.

While the city uses the term “gap” instead of deficit spending they are both the same and are where the operating expenses in the fund exceed the operating revenue into that fund.

In the 2012 budget, the general fund revenues are expected to be $12,445,766 and the expenditures $12,793,590 for a deficit of $347,824.

The deficit in the REET1 fund isn’t quite as straightforward. Those who thought the community center debate would be over once the decision to build it was made are likely disappointed and will be for the next 20 years.

That’s because the largest expenditure in the city’s history was financed at 100 percent with most of the payments coming from the REET1 fund, which is also used for other capital public safety projects, including sidewalks, streets and parkland acquisition (like Japanese Gulch).

Unfortunately, the 2012 projected revenue into the REET1 fund is $417,000, while the payments (debt service) for the community center alone are $905,650 for a deficit of $488,650.

Add to that an additional $425,745 in REET1 spending (this represents over a 10 fold increase from 2011 which was $40,200), and now the 2012 deficit in the REET1 fund is a whopping $914,395.

Combined, these two funds are spending $1,262,219 more than the city is taking in. The obvious question you’re probably asking is where does the extra money come from?

It comes from the beginning fund balance, which is currently $4,468,000 for the general fund and $4,582,770 for the REET1 fund. These amounts are used to “balance” the budget.

The city has a long range financial plan developed by a committee and adopted by the council that is intended to get the spending problem under control. Unfortunately, what many believe is adhering to the long range financial plan is in reality preventing the responsible daily management of the city’s finances.

This became disturbingly obvious to me when the council not only dismissed a recently proposed council balanced budget resolution but actually voted against even putting it on a future agenda for discussion.

Whenever a long range plan is used as an excuse for irresponsible short term management, you have a problem. We have a problem.

 

We have a full time mayor, city administrator and finance director. It’s their job to bring a balanced budget before the council.

There’s absolutely nothing wrong with requiring the mayor and his staff to show the council what an actual balanced budget would look like if they had to balance it today. It’s then up to the council to decide if the pain associated with a balanced budget is too great.

Unlike many cities, Mukilteo’s council or even finance committee isn’t included in the actual budget planning process. The mayor and his staff decide what budget proposals and requests come before the council and which don’t.

As a result, during the budget hearings each year, the council gets caught up in debating minor items that really amount to little more than “rubber stamping” the mayor’s proposed budget.

Recently we have had an IT (Information Technology) disaster and have lost critical city records including financial data and internal and public records.

The problem is the result of an accumulation of poor management decisions by the mayor and his management team.

Not only were suggestions from the IT manager not addressed or followed up on, IT requests were blocked from coming before the council. I’m very critical of this situation because I’m in the IT business.

Now staff members are being instructed not to talk to councilmembers (or maybe it’s just me), which makes me even more critical. The reality is, the leadership is covering their backsides because “heads would roll” if this happened in the real world.

Speaking of which, when the Mukilteo accounting services manager allegedly made that comment (as stated in the letter of reprimand she received), she was called into her supervisor’s office and chose to quit rather continue to work under these adverse conditions.

That’s a big loss for the city, considering she was heading up the effort to rebuild the city’s financial data from the last backup of Dec. 15 in preparation for the state auditor’s 2011 audit.

The city is on the verge of losing other employees as a result of how IT has been managed and the inevitable fallout. The irony is that outside of the Mukilteo bubble, heads would roll, and they’d be the heads of those who kept critical information from the board (i.e. council).

This is all going to cost us money, and I’m sorry to say, you get to pay for it.

To discuss this or any other city issue you’re interested in, please join Councilmember Schmalz and myself next Thursday, May 17, between 7:30-8:30 p.m. in the Rosehill room at the community center.

The preceding feature is published the second Wednesday of each month for The Beacon and is the opinion of Kevin Stoltz and may or may not represent the views of the Mukilteo City Council.

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The Rosehill Community Center recently received the Facility Spotlight Award from the Washington Recreation and Parks Association. The award was presented at the association’s annual conference on May 3.

“All the hard work by the Mukilteo City Council, the Design Committee, ARC Architects, and the city staff paid off with a beautiful building that offers recreation and rental opportunities to the community,” said Jennifer Berner, Recreation and Cultural Services Director, who accepted the award on behalf of the city.

The WRPA committee was impressed by Rosehill’s signature spaces, how each room captures the stunning view of the water, and the high numbers the community center accomplished in its first year of operation.

Rosehill saw a 35 percent increase in the number of recreation programs offered, a 45 percent increase in recreation program participation, and exceeding revenue projections by $78,000. The Lodging Tax Fund also had a $20,000 increase as a result of Rosehill’s first year of operation.

The criteria for the award was: community needs and design objectives, obstacles the project encountered and how they were overcome, how the finished project reflects outstanding use of the site, and how the project demonstrates the character of the community and how it is committed to parks and recreation.

The Washington Parks and Recreation Awards Committee was made up of professionals from all over the state.

DALLAS —

Airlines around the world are updating their fleets with new, more fuel-efficient planes, and that’s good news for aircraft maker Boeing Co.

The Chicago company said Wednesday that first-quarter profit soared 58 percent, beating analysts’ expectations, as sales at its commercial airplane division surged. Even it defense business grew, although much more slowly.

Boeing delivered 137 commercial airplanes in the quarter, winning bragging rights over European rival Airbus, which had 131 deliveries.

Boeing’s backlog rose, partly on orders for a new, more fuel-efficient version of its venerable 737 jetliner. Chairman and CEO W. James McNerney Jr. said the company was focused on profitably boosting commercial airplane production and delivery rates.

The company’s stock price rose $3.19, or 4.4 percent, to $76.40 in morning trading. Before Wednesday, shares had been flat in 2012.

Boeing earned $923 million, or $1.22 per share, in the first quarter, compared with $586 million, or 78 cents per share, a year earlier. Excluding a gain from settling litigation, the company earned $1.11 per share, beating analysts’ expectations of 96 cents.

Revenue rose 30 percent, to $19.4 billion, topping analysts’ forecast of $18.5 billion.

The gains were driven by strength in sales of commercial airplanes, which trumped slow growth in the defense business. Boeing’s 137 deliveries compared with 104 commercial planes delivered in the first quarter last year.

The company’s commercial-plane backlog increased to $308 billion and had more than 300 orders for the 737 Max jetliner, which is expected to be ready in a few years to compete with the A320neo being developed by European rival Airbus. Both are single-aisle planes designed for short and medium-length flights.

In all, Boeing said it now has orders to build more than 4,000 commercial planes. The company did not comment on recent reports that it may be close to winning a big order from United Airlines. United has declined to comment.

Maxim Group LLC analyst Ray Neidl said the increase in deliveries showed that Boeing “is beginning to ring the cash register on its solid order placement.” He predicted that orders will continue to rise for both small and large commercial jetliners.

First-quarter revenue from commercial planes jumped 54 percent, to $10.94 billion, while revenue from defense and space work grew just 8 percent, to $8.23 billion, reflecting tighter government budgets. The backlog of military planes grew 20 percent to $72 billion on orders for F-15 fighter jets and C-17 cargo planes.

Boeing raised its profit forecast for 2012 because it expects to set aside less money for litigation. The company predicted it will earn between $4.15 and $4.35 a share this year, up from a January forecast of $4.05 to $4.25. The new figure is still below the $4.48 per share that analysts expect.

Citigroup analyst Jason Gursky said Boeing was being conservative by not raising its 2012 forecast more. He said the company was probably holding back because of recent tornado damage at a supplier in Wichita, Kan., and questions about how quickly it can increase production of its new, large 787 jetliner, which fell far behind schedule.

It didn’t take long for the naysayers in real estate to jump all over the National Association of Realtors’ Existing Sales Report which was released last week. It is true that sales were down 2.6% from the previous month. However, monthly variations should not be the determining factor in deciding where the market is going. For example, in the same report, NAR explained that sales WERE UP 5.2% over last March’s numbers. The experts should look at the key underlying data that truly determines where the market will be heading. Here is what leading economists in the housing industry are saying: Paul Diggle, property economist, Capital Economics “March’s decline in existing home sales probably reflects the normal month by month volatility rather than renewed underlying weakness. The increase in households’ confidence in the outlook for the housing market, coupled with a gradual improvement in the pace of the economic recovery, should drive a rise in home sales later this year….It is possible that the pattern within the quarter has been driven by the weather, with falls in the most recent two months reflecting a degree of payback after January’s gain.”  Doug Duncan, chief economist, Fannie Mae “Conditions are coming together to encourage people to want to buy homes. Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that homeownership is a more compelling housing choice.” Celia Chen, senior director of housing economics, Moody’s “The residential property market is recovering, as the factors underlying demand and supply strengthen. Even after accounting for unusual seasonal patterns brought on by the unusually warm winter, conditions have not been this strong since the government ended homebuyer tax credits in 2010.” Mark Vitner, senior economist, Wells Fargo “Existing home sales dropped 2.6 percent, but are up 5.2 percent from a year ago. While existing sales are down for the second consecutive month, we are likely continuing to see payback from increases earlier this year. That said, we could see one more month of disappointing data, but we still contend the recent declines are not indicative of the trend. Stabilization will become more apparent once we return to normal weather.” Mark Fleming, chief economist, CoreLogic “Since the peak in home prices, mortgages rates have declined and affordability has risen dramatically. Housing affordability is at levels not seen since prior to the early 1990s …While real estate professionals often say that “now is a good time to buy,” it is clear today that April 2006 was probably not a good time to buy, while now may well be the time.” via kcmblog.com

Hundreds of households will participate in the annual event on Saturday, April 28, but only the smart ones will place an ad seen by thousands of potential buyers. Still only $10 and includes a FREE garage sale sign. Listings will be published in both the Mukilteo and Edmonds Beacon newspapers that week. Don’t be left out! Forms are available in the Beacon every week.

Lean economic times and the corresponding reduction in state and federal funding are forcing nonprofit organizations to look at new ways to generate revenue, and to do it on a sustainable basis.

One approach, called “social enterprise,” is to develop revenue-generating business that can earn unrestricted income and increase visibility. HopeWorks Social Enterprises, established in 2010 by Housing Hope, is hosting a series of workshops to assist nonprofits in understanding the opportunities and challenges associated with successful social enterprise.

The workshops will be conducted at the Housing Hope Village, 5908 Evergreen Way, Everett, offering dynamic, interactive sessions featuring technical training, featured speakers and updates from local social enterprise initiatives. They will include case studies and best practices from the field, technical training, input from fellow participants and guest speakers.

· David Simienski, Founding and Managing Director of Credit Advantage is the featured speaker – May 2, 2012

David shares experiences of creating social enterprise for banking solutions for low-income and “unbanked” customers.

· Writing a Business Plan – June 6, 2012

This hands-on workshop will provide technical assistance for creating a social-enterprise business plan.

The cost for each is $10. Agencies are encouraged to send multiple staff members. To register, contact Mary Jonasen at maryjonasen@hopewrks.org or 425-347-6556, ext. 242.

Food Revolution Snohomish County, a movement aimed at encouraging growing, cooking, preserving, and eating real healthy food, brings a new community event to Lynnwood.

The Celebration of Food Festival will be a free, family event where participants can taste, explore, and experience real food from  11 a.m. to 5 p.m., Sunday, May 20, at the Lynnwood Convention Center, 711 196th Street Southwest, Lynnwood, 98036.

“This event brings together people who are passionate about delicious, local, wholesome food,” said organizer Chris Hudyma. “Farmers, ranchers, culinary professionals, youth, students, and business owners will offer activities to inspire the enjoyment of real food.”

The Celebration of Food Festival is sponsored by Cascade Harvest Coalition, Cedar Grove Composting, Central Market, City of Lynnwood, Edmonds Community College, Sno-Isle Food Co-op, Verdant Health Commission, and Whole Foods Market Lynnwood.

The event will include free samples, demos, displays of foods in categories throughout the center: Surf & Turf, Sweet & Nutty, Kickin’ Flavor, Veggies & Fruit, Great Grains, and Preservation.

Fifty vendors are confirmed to be at the event including: Hot Cakes Confections (owned by Edmonds Community College Distinguished Culinary Arts Alumna Autumn Martin), Taylor Shellfish, Manna Mills, Pappardelle’s Pasta, Four Sisters Gourmet Sauces, and Theo Chocolate.

Farms from throughout the region will be represented including: Aldrich Farms of Bellingham, Chinook Farms of Snohomish, Garden Treasures Organic Farm of Arlington, Klesick Family Farm of Stanwood, Ninety Farms of Arlington, Willie Green’s Organic Farm of Monroe, and Rubberneck Farms of Edmonds, and local farmer’s markets.

There will also be demonstrations by farm and garden professionals including WSU Snohomish County Extension to show how to grow food and where to purchase locally grown food.

Experts and resources will be available to help both children (with help from Imagine Children’s Museum and Readers to Eaters) and adults to learn everything about growing, cooking, and preserving food.

For more information, email foodrevsnoco@edcc.edu, go to www.edcc.edu/foodfest, or connect with Food Revolution Snohomish County on Facebook www.facebook.com/foodrevsnoco.